The Pensions Regulator has begun formal legal proceedings
against Sir Philip Green and Dominic Chappell that could force them to fill the
£571m deficit in the BHS pension scheme, marking a dramatic escalation of the
scandal surrounding the demise of the high street chain. The regulator said
that after a “complex investigation” and months of talks with Green about a
rescue deal for the pension scheme it was sending warning notices to the
billionaire tycoon, Chappell and their companies. Lesley Titcomb, chief
executive of TPR, said it was yet to receive “sufficiently credible and
comprehensive offer” to bail out the BHS pension scheme, which has more than
20,000 members, despite Green pledging to fix the problems facing it. BHS
collapsed into administration in April, leading the loss of 11,000 jobs and
leaving a pension deficit of £571m. Green controlled BHS between 2000 and 2015,
during which time his family and other shareholders collected more than £580m.
Green sold BHS in March 2015 to Chappell, a serial bankrupt with no retail
experience, for just £1. Retail Acquisitions collected an estimated £17m from
BHS despite owning it for just 13 months until it fell into administration. Last
month the House of Commons voted unanimously to strip Green of his knighthood,
which was awarded a decade ago for services to retail. During a fiery debate in
parliament, Green was lambasted and described as a “billionaire spiv”. GUARDIAN

HMRC chasing £1.9bn
tax from UK's richest people

The National Audit Office said HMRC's specialist unit recovered
£416m in 2015 from 6,500 "high net worth individuals" with wealth of
more than £20m. But efforts are ongoing to recover an estimated £1.9bn, the NAO
said. Each one of the group of 6,500 is assigned their own HMRC official to
liaise with over their tax bill. The £416m is in addition to tax the wealthy
individuals voluntarily declare, which totalled more than £4.3bn in 2014-15. They
often have complex tax affairs involving different countries. The £1.9bn figure
of tax that is "at risk" of not being received, is an estimate and
not all of it will be owed once each case has been examined in detail, the NAO
said. According to the NAO, HMRC is criminally investigating 10 high net worth
individuals in relation to illegal offshore tax evasion, although just one has
been prosecuted since 2010. It is aiming to increase the number of prosecutions
to 100 by 2020. The specialist unit recovers £29 for every £1 spent on staffing
costs, the NAO said. HMRC is also investigating the huge leak of records from
law firm Mossack Fonseca, known as the Panama Papers, which revealed how the
rich and powerful use tax havens to hide their wealth. According to the NAO
report, tax officials have identified 40 of the wealthiest group in the leaked
data and are deciding whether their files warrant further investigation. The
report also found that 137 of the country's richest who had undisclosed assets
in Liechtenstein used an agreement with the tax haven in 2009 to admit their
liabilities in return for less harsh penalties, with an average settlement of
£1m per person. BBC NEWS

Death of the payday
loan? Lending plunges by 70 PER CENT as watchdog crackdown bites

Around 1.8million loans were issued last year, down from ten
million just three years earlier, according to the chief executive of the
Consumer Finance Association Russell Hamblin-Boone. The majority for firms
offering high-cost short-term credit have moved out of the market altogether, with
just 60 authorised firms remaining where once there were 240, analysis of FCA
figures from the industry body suggest. ‘Margins are very small now and we have
seen a reduction in the market as a result of the regulation and price
control,’ he said. Stringent controls were placed on payday lenders in 2014 and
2015, in an attempt to protect borrowers from eye-watering fees and debts
spiralling out of control. The new rules mean that borrowers incur no
additional charges over and above 0.8 per cent interest per day. The maximum
penalty that a lender can charge a customer who misses a payment is £15 over
the length of the loan. The loan cost cannot escalate in interest beyond 100
per cent of the amount borrowed in the first place. Loans still incur very high
levels of interest. However lenders are obliged to make sure that their
customers can afford them and are treated fairly if they fall into
difficulties. The new rules mean that for many firms operating in this area,
offering payday loans was no longer profitable. Speaking to the Financial
Exclusion Committee at the House of Lords, Mr Hamblin-Boone pointed out that
people who take out this type of loan are ‘from all walks of life – in senior
positions in industry to those on zero contract hours in catering and
cleaning’. The average income of a borrower is £25,500, compared to the UK
average of £26,000, while they are more likely to be working full time than the
population as a whole, he said. The FCA crackdown saw several lenders issued
with large fines and demands to pay compensation to customers. In 2014, Wonga
was ordered to pay £2.6million to around 45,000 customers for unfair and
misleading debt collection practices. CFO Lending, which traded under names
including Payday First and Money Resolve, had to repay almost £35million to
nearly 100,000 customers after the watchdog found evidence of ‘unfair
practices’. DAILY MAIL

A third of money that
banks make from customers comes from overdraft interest and charges. Watchdog
to probe fees

Despite the huge cost, customers are rarely aware of what
they pay and even more rarely switch accounts to pay less. As a result, the
Financial Conduct Authority says it will take action to improve competition in
the current account market. It follows a series of recommendations proposed by
the Competition and Markets Authority in August as part of its investigation
into retail banking. Data from information website Moneycomms shows that the
Halifax reward account, NatWest/RBS select and TSB classic typically have the
highest annual fees for slipping into the red. The average cost of a high
street bank overdraft is now six times higher per month than it was seven years
ago, rising from £2 monthly in 2008 to £12 today. More than half of UK adults
incur a fee from spending over their limit. DAILY MAIL

Payday and car
finance loan sharks forced to wipe off £414m of unpaid debts for more than
500,000 people

Motormile Finance, which bought debts from payday lenders
including Cash Genie, Mr Lender, Lending Stream and WageDayAdvance, was found
to have unfairly pursued customers. Now the Financial Conduct Authority has
forced it to wipe out £414million of unpaid debts, and repay £154,000 to more
than 2,000 affected customers. It said Motormile had been unable to provide
evidence that the outstanding debt amounts were correct, leading to 'poor
treatment of customers'. Online customer forums highlight a catalogue of
complaints against Motormile, with borrowers claiming it added default notices
to their credit histories even when they had not borrowed money. Others said
they had been hounded by emails and house visits from debt collectors. Another
person said Motormile had contacted her workplace, and provided personal
details to her manager. 'The message stated they were sending an agent to my
work,' she added. 'I got called into the office to ask if I was in any trouble
and it was very embarrassing.' Yorkshire-based Motormile also trades as MMF,
MMF Debt Purchase and MMF UK. In a statement chief executive Denise Crossley
apologised to affected customers. Motormile is owned by Neil Petty, 52, and
Barnaby Page, 46, who were paid £1.5million in 2014, and £530,000 last year,
according to documents filed at Companies House. It collected £12.3million from
debtors last year, and in 2014, it said it owned debt worth £808million. DAILY MAIL

Buying a home
‘cheaper than renting’ in two out of three towns

Website Zoopla compared rents being asked for twobedroom
homes in 50 locations with average mortgage premiums and a 10 per cent deposit
– the size often put down by first-time buyers. It found that in 60 per cent of
towns and cities, buying was more cost-effective than renting. The proportion
has increased since April, when buying was cheaper in 48 per cent of places.
Owners in Glasgow fare particularly well, the research suggests, parting with
an average of £450 per month, while renters fork out an average of £596. Owning
in Birmingham and Bradford was also found to be particularly cost-effective. But
renting often works out cheaper in southern England where house prices can be
particularly high. In London, renting can work out £1,118 cheaper per month
than a mortgage, while the difference in Cambridge can be £549 per month. The
research assumed that a mortgage holder would be on a 25-year repayment deal
with a fixed interest rate of 4.5 per cent. Lawrence Hall, of Zoopla, said: “Whereas back in April it
was cheaper to service a monthly mortgage than pay rent in just under half of
Britain’s big [towns and] cities, buyers are now offered better value in nearly
two-thirds of these locations.” EXPRESS

Buy-to-let and second
homes made up a QUARTER of all property sales this summer

Despite typical stamp duty costs tripling for second home
buyers in April, HMRC data shows that 56,100 of 235,000 property purchases in
the third quarter included the additional surcharge. As a result, this stamp
duty hike clawed in an extra £440million for the taxman in the three month
period of July to September. In total, HMRC has creamed an additional
£670million from the move since April. The statistics show in the three months
of April, May and June, a slimmer 30,300 of 207,900 purchases were for second
properties, indicating investors had already rushed to beat the 1 April hike. This
data indicates that despite the extra costs and the EU referendum decision,
appetite for buy-to-let remains robust. The stamp duty surcharge on second
homes was introduced by Chancellor George Osborne who announced it in his
Autumn Statement in November 2015. As well as investors and holiday home
buyers, it has hit buyers in a raft of scenarios, including parents buying for
children. On top of the stamp duty hikes, landlords are losing one of their
major tax breaks next year. A tax relief change will curb the amount of
mortgage interest landlords can offset against tax on their property
investments and could mean buying and renting out property is no longer viable
for some. Some experts believe that as a result of the moves, rents could rise
or tenants could be evicted as landlords look to sell before they are phased
in. DAILY MAIL